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Jobless benefits could end for 7,000 New Mexicans

Posted:
11/18/2012 04:30:20 PM MST

SANTA FE, N.M. (AP) - About 7,000 jobless New Mexicans will lose unemployment benefits at the end of the year if Congress and the president don't agree to extend the assistance, legislators were told Friday.

That represents about a third of the New Mexicans currently receiving unemployment payments, which range from a minimum of $74 a week to a maximum of $397.

Workforce Solutions Secretary Celina Bussey told the Legislative Finance Committee there will be no federal extended unemployment benefits starting in January unless the program is continued.

The state pays for jobless benefits for 26 weeks, and the federal government picks up the cost of 28 additional weeks of assistance because of high unemployment.

About 21,000 New Mexicans are receiving unemployment payments, with a third of those covered by federal extended benefits. New Mexico's unemployment rate was 6.4 percent in September, down from 7.4 percent a year ago.

Unemployment assistance is one of the issues confronting Congress and President Barack Obama as they consider how to avoid a year-end "fiscal cliff" of tax increases and spending cuts.

In New Mexico, the Legislature will face decisions next year on how to shore up the state's unemployment compensation fund, which is paying out about $750,000 a day in benefits. The program is financed by taxes on employers.

It's estimated that employers will pay about $234 million for the unemployment fund this year but the state will provide about $254 million in jobless benefits.

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The fund had a balance of about $59 million earlier this month. That's projected to drop to about $21 million next March but rebound to $65 million by the end of 2013.

Bussey said Gov. Susana Martinez will propose changes in the upcoming legislative session to the system that determines the tax rate each employer must pay. One proposal is aimed at ensuring that employers contribute more if they have a high turnover in their workforce, which causes jobless benefits to exceed how much the employer paid into the system.

Under the current system, employers with the worst unemployment experience hit a maximum tax rate and then other businesses potentially are forced to pay more to keep the program solvent.

In recent years, the Legislature has determined a broad range of tax rates that will be in place from year to year. That decision has hinged largely on economic conditions and the cash balances in the unemployment compensation fund. The administration wants to implement a rate-setting system that responds to changes in the economy but eliminates the uncertainty of political decision-making on unemployment taxes for businesses.

Bussey said employer contributions will go up in January by about $15 million. If no changes are made in the system, a far larger tax increase could be required in 2014.

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